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Thursday, September 18, 2014

Daily update 9/18

A new high close on SPX, the Dow and the transports.  Here is a look at SPX.

SPX closed just fractionally above the prior intraday high.  Will SPX keep going or will this turn out to be a failed test of the high?  It was a very strange day despite the high close.  Breadth was only 59% positive.  Not exactly a sign of bulls rushing in.  That is not the strange part though.   There were
112 new highs and a whopping 78 new lows.  Since we had a sizable gap up this morning and never traded even close to negative on the day that is rather striking.  I have not seen new lows that high with SPX at all time highs since back in the 1999-2000 time period.  I thought new lows were elevated in Oct. of 2007 in the 30s and 40s as the market was making its final high.  This is definitely abnormal behavior.  The big technical divergences I have been talking about for weeks are still in place.  Lets take a look at the futures chart.

The futures popped up several points after hours (maybe early results on Scottish independence vote).  The market traded mostly sideways all day after the opening gap up.  Breadth has been weak on this leg up.  It looks like it is mostly driven by long index positions.  Was that Wall Streets way of making sure the much talked about Alibaba IPO comes out tomorrow without a hitch?  I am sure Wall Street firms are making a lot of money on the deal.  They had a vested interest in making the market look good so there would be a lot of investor appetite for the stock.  It will be interesting to see what happens next week.

I will be watching SPX's 18 DMA (1998) as a bull/bear line.  Since we are retesting a high a close back below that line is likely to bring on some selling.  In the mean time we will see how far the bulls are willing to take it.

It seems like almost every night I have to change something in the trend table.  Despite the extremely bullish sentiment out there the market is clearly churning around.  At highs that is usually the sign of a top.  I guess we will see what happens.


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